Friday, November 28, 2008

Because it is convenient and efficient to communicate with others while on the road, Californians are almost universally ignoring the latest attempted nanny state overreach by their legislators. By my observation, cell phone use by the state's drivers has not been diminished one iota by the hubristic assumption of the clowns in Sacramento that they could affect natural human behavior by enacting a law. Reminds one of the healthy resistance with which people responded to efforts to impose a nationwide 55 m.p.h. speed limit. As more nutty laws are put on the books, more people decide for themselves which laws to obey and which to ignore, and this leads to increasingly widespread flouting of more laws and, ultimately, a complete breakdown in respect for law generally.

Tuesday, November 25, 2008

It turns out that the $850 billion dollar lifeline that Congress gave to the Secretary of the Treasury to toss about as he wishes in an effort to rescue his hapless financial institution buddies is just a drop in a much larger bailout bucket.

In the past couple of days it has come to light that the Federal Reserve already has disbursed $2.8 trillion out of $7.4 trillion that it has allocated for the same purpose. That right, trillions.

That comes to $24,000 for every person -- every man, woman, and child -- in the U.S. Enough to pay off about 60% of all of the nation's outstanding mortgage debt.

Where's the money coming from? Well, the Fed is just printing it. This, of course, cheapens the dollar, deflating its value, which in turn is theft from the buying power of the earnings of working people, and of anything and everything Americans have been able to save for the future.

Adding insult to the injury of theft, the unaccountable to anybody Fed is refusing to disclose the recipients of its largess and what, if anything, its getting in return for the mind boggling disbursements.

Leaders of the big three domestic automakers were sent packing without the $25 billion handout they were seeking from the public treasury. Congress told them to come back and try again when they had a plan for returning their respective companies to viability.Think about that. It means that the auto makers' executives jetted to the nation's capitol expecting to get a bailout to delay the collapse of their companies. They didn't have any coherent plans for using the taxpayer funds they were seeking to transform their companies into self sustaining enterprises.

They'll probably be back with some kind of fairy tale plan that will give Congress sufficient cover for giving the auto makers enough funds to kick the problem down the road, delaying their inevitable ruin until others are in office and have to deal with the problem.

The fact of the matter is that the auto makers are failed enterprises bereft of anything approaching adequate leadership. Their only possible salvation lies in the kind of restructuring that can be accomplished best, and perhaps solely, through Chapter 11 bankruptcy proceedings.

This explains a lot. And it also deepens one's pessimism. Clearly, we cannot survive as a free country if citizens are this stupid.

"The report found that only 54% of college graduates can correctly identify a free enterprise system as one in which individual citizens create, exchange, and control goods and services.Of course, this statistic reflects the civic understanding of college graduates. Those without a college degree fare even worse"

And, even better, our "leaders" are not even that smart:

"Most damning of all, perhaps, is that self-identified elected officials score lower on average than the general public. So not only are our politicians illiterate in matters of political history and economics, they are less knowledgeable than the already lamentably ill-informed average citizen. Fifty-four percent do not know that the Constitution gives Congress the power to declare war. They tested worse than everyone else in the subjects of First Amendment freedoms, international trade, abortion, and many more. "The blind leading the blind" has never seemed more appropriate."

In the past, when I've said that I doubt lawmakers have ever read the Constitution, I was making a snarky point, not speaking literally. Apparently, however, it appears I was speaking the literal truth. Boy, there's some cold comfort.

Every single sphere of life in which Liberals/Leftists have control is in ruin. And obviously, one of them is EDUCATION.

"I consider the foundation of the Constitution as laid on this ground that 'all powers not delegated to the United States, by the Constitution, nor prohibited by it to the states, are reserved to the states or to the people.' To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, not longer susceptible of any definition."

. . . Thomas Jefferson (Opinion on the Constitutionality of a National Bank, 15 February 1791)

Monday, November 24, 2008

More billions of our tax dollars are being poured into the bottomless pits that the nation's major financial institutions have become. The institutions truly are the living dead, kept from the extinction they deserve only by a public welfare lifeline -- flows of cash from the public treasury.

No changes are being made in the teams of 'executive talent' that created an insatiable need for ever more of the same by recklessly gambling away the country's wealth at the behest of our political 'leaders.' Thus the overpaid fools whose lack of judgment led them to squander the equity of their respective institutions will continue to be the ultimate arbiters of whether and to what extent less favored citizens will be worthy of credit if and when their institutions ever resume lending.

It's a perfectly absurd cosmic joke. The politicians require ordinary working Americans to pay taxes, which the politicians then cycle to their high rolling friends, who then divide the cash into (i) gambling money to play in the big mortgage and other high risk casinos, and (ii) bribes to go back to the politicians, who keep the cycle going.

Anybody who voluntarily pays or contributes anything to keep this corrupt cycle going deserves the impoverishment that lies ahead.

Now that the election is over, I hear that Sarah Palin is going to show there is no animosity about losing the election. She has invited both Obama and Biden on a moose hunting trip. She has already lined up Dick Cheney to teach gun safety and Ted Kennedy to drive them to their cabins after the pre-hunt party.

Wednesday, November 19, 2008

"It is of great importance to set a resolution, not to be shaken, never to tell an untruth. There is no vice so mean, so pitiful, so contemptible; and he who permits himself to tell a lie once, finds it much easier to do it a second and a third time, till at length it becomes habitual; he tells lies without attending to it, and truths without the world's believing him. This falsehood of the tongue leads to that of the heart, and in time depraves all its good disposition."

Change is bringing a grand but not so new day.It looks like Eric Holder is going to be the attorney general in the Obama administration. The nation's new chief law enforcement official is the former Clinton administration Justice Department lawyer whose most notable achievement was serving as the midwife for the Marc Rich pardon in the Clintonistas' last days in power.

Former Senate majority leader Tom Daschle also is coming back. He's going to be the secretary of health and human services.

And Hilarity apparently is on the brink of being named secretary of state.

Change seems to mean the regathering of the old gang of ours, proving once again that the more things change, the more they stay the same.

Account receivable are swelling but cash flow has dried up. Clients aren't able to pay because their operating lines of credit have been frozen by their banks -- the same banks that are getting rescued -- with our tax money -- from the consequences of their past bad decisions, decisions that brought down our economy. So now they are hoarding their resources and wreaking further damage on the economy and the rest of us.

Just Say No to DetroitGiven the abysmal performance by Detroit's Big Three, it would be better to send each employee a check than to waste it on a bailout, says David Yermack.

Before Michael Moore became famous for documentaries like "Fahrenheit 9/11" and "Sicko," his first big success came in 1989 with "Roger and Me." In that film, Mr. Moore followed General Motors chairman and chief executive Roger Smith with a camera crew, asking him why the company was closing plants and producing low-quality vehicles. Mr. Smith looked flustered and inartfully avoided Mr. Moore's camera crew while it lingered outside his country club or GM's executive offices.

"Roger and Me" was entertaining, but it missed the real story about Roger Smith, who turned out to be a forward-thinking genius. Mr. Smith made big investments in information technology and satellite communications, acquiring Electronic Data Systems in 1984 for $2.5 billion and Hughes Aircraft in 1985 for $5.2 billion. Mr. Smith's successors divested those businesses at huge profits -- EDS was taken public in 1996 for more than $27 billion, and Hughes, renamed DirecTV, went public in 2003 for more than $23 billion. (The man who sold EDS to Roger Smith at a bargain price was H. Ross Perot, who then convinced many people that the experience qualified him to be president.)

Mr. Smith understood all too well that GM shouldn't continue investing in its failing automobile business. That was 25 years ago. Today, our government is being asked to put tens of billions of dollars in GM, Ford and Chrysler, but we would be much better off if Washington allowed these companies to go bankrupt and disappear.

In 1993, the legendary economist Michael Jensen gave his presidential address to the American Finance Association. Mr. Jensen's presentation included a ranking of which U.S. companies had made the most money-losing investments during the decade of the 1980s. The top two companies on his list were General Motors and Ford, which between them had destroyed $110 billion in capital between 1980 and 1990, according to Mr. Jensen's calculations.

I was a student in Mr. Jensen's business-school class around that time, and one day he put those rankings on the board and shouted "J'accuse!" He wanted his students to understand that when a company makes money-losing investments, the cost falls upon all of society. Investment capital represents our limited stock of national savings, and when companies spend it badly, our future well-being is compromised. Mr. Jensen made his presentation more than 15 years ago, and even then it seemed obvious that the right strategy for GM would be to exit the car business, because many other companies made better vehicles at lower cost.

Roger Smith, who retired as chairman in 1990, seemed to understand that all too well, and so did Chrysler's management, which happily sold their company to Daimler Benz for $30.5 billion in 1998. That deal, one of the savviest corporate divestitures ever, ended very badly for Daimler, which essentially paid Cerberus a few billion dollars (by agreeing to retain pension liabilities) to take Chrysler off its hands in 2007.

Over the past decade, the capital destruction by GM has been breathtaking, on a greater scale than documented by Mr. Jensen for the 1980s. GM has invested $310 billion in its business between 1998 and 2007. The total depreciation of GM's physical plant during this period was $128 billion, meaning that a net $182 billion of society's capital has been pumped into GM over the past decade -- a waste of about $1.5 billion per month of national savings. The story at Ford has not been as adverse but is still disheartening, as Ford has invested $155 billion and consumed $8 billion net of depreciation since 1998.

As a society, we have very little to show for this $465 billion. At the end of 1998, GM's market capitalization was $46 billion and Ford's was $71 billion. Today both firms have negligible value, with share prices in the low single digits. Both are facing imminent bankruptcy and delisting from the major stock exchanges. Along with management, the companies' unions and even their regulators in Washington may have their own culpability, a topic that merits its own separate discussion. Yet one can only imagine how the $465 billion could have been used better -- for instance, GM and Ford could have closed their own facilities and acquired all of the shares of Honda, Toyota, Nissan and Volkswagen.

The implications of this story for Washington policy makers are obvious. Investing in the major auto companies today would be throwing good money after bad. Many are suggesting that $25 billion of public money be immediately injected into the auto business in order to buy time for an even larger bailout to be organized. We would do better to set this money on fire rather than using it to keep these dying firms on life support, setting them up for even more money-losing investments in the future.

Two main arguments are being raised to justify a government rescue of the auto industry. First, large numbers of jobs may be at stake, perhaps as many as three million if one counts all the other firms that supply the Big Three. This greatly overstates the situation. Americans are not going to stop driving cars, and if GM, Ford and Chrysler disappear, other companies will expand to soak up their market share, adding jobs in the process. Many suppliers will also stay in business to satisfy the residual demand for spare parts even if the Detroit manufacturers go under. If the government wants to spend $25 billion to protect auto workers, it would do better to transfer the money to them directly (perhaps by cutting each worker a check for $10,000) rather than by keeping their unproductive employer in business.

Second, it is suggested that the failures of the U.S. financial industry, which have cost us something like $700 billion, justify bailouts of other sectors of the economy. This makes no sense. If the government diverts our national savings into businesses that have long track records of destroying investment capital, eventually we'll end up with an economy like France's -- orZimbabwe's.

Other arguments are on the table as well. Some see the troubles at GM and Ford as opportunities to retool the auto industry to produce environmentally friendly cars. Given their long track records of lobbying against fuel economy standards and producing oversized gas guzzlers, this suggestion seems ridiculous, sort of like asking cigarette companies to help with cancer research.

Not many of my students today remember "Roger and Me" (many confuse the film with another picture from the same era about the cartoon character Roger Rabbit). However, Roger Smith's example casts a long shadow over the auto industry today. It's time to cut our losses and let society's scarce investment capital flow to an industry with more long-term potential to create jobs and economic value.

David Yermack is a professor of finance at New York University's Stern School of Business

A forgotten war but not forgotten acts of heroism -- Forwarded From a Regular Reader of/Visitor to this Blog:

You're an 18 or 19 year old kid. You're critically wounded, and dying in the jungle in the Ia Drang Valley, 11-14-1965. LZ Xray, Vietnam. Your Infantry Unit is outnumbered 8 - 1, and the enemy fire is so intense, from 100 or 200 yards away, that your own Infantry Commander has ordered the MediVac helicopters to stop coming in.

You're lying there, listening to the enemy machine guns, and you know you're not getting out. Your family is half way around the world, 12,000 miles away, and you'll never see them again. As the world starts to fade in and out, you know this is the day.

Then, over the machine gun noise, you faintly hear that sound of a helicopter, and you look up to see a Huey, but it doesn't seem real, because no Medi-Vac markings are on it.

Ed Freeman is coming for you. He's not Medi-Vac, so it's not his job, but he's flying his Huey down into the machine gun fire, after the Medi-Vacs were ordered not to come.

He's coming anyway.

And he drops it in, and sits there in the machine gun fire, as they load 2 or 3 of you on board.

Then he flies you up and out through the gunfire, to the Doctors and Nurses.And, he kept coming back . . . 13 more times . . . and took about 30 of you and your buddies out, who would never have gotten out.

Medal of Honor Recipient Ed Freeman died on Wednesday, August 20, 2008, at the age of 80, in Boise, Idaho.

May God rest his soul.....

Additional information about, and photos of this American hero can be seen here and/or by Googling his name.

Saturday, November 15, 2008

Government is being stripped of its legitimacy by the transformation of elections into political charades.

The game currently is being played out in Minnesota where the odious Al Franken garnered enough votes to almost win a U.S. Senate seat. The closeness of the election made it worthwhile for him and his supporters to continue the process -- . . . count . . . and count . . . and count . . . and keep on counting, and then recount . . . and recount . . . and recount . . . and keep recounting, and all the while keep finding and producing enough additional votes to win or at least to get the decision into the courts. And, if the counts, recounts, and judges still don't provide a victory, take it to the majority party in the Senate itself to overturn the Minnesota majority.

Several precedents for this comedy were seen four years. Everyone remembers and therefore there is no need to relate anything about the Florida spectacle. But fewer people recall or ever knew about a court ordering that the polls in St. Louis be kept open beyond the specified closing time to enable the city's political machine to produce enough additional votes to swing the state's electoral college vote. And don't forget how Washington State's governorship was switched when a third recount turned up more votes than there were voters in certain selected urban precincts.

All this builds on, and emulates the corrupt traditions of our big city political machines. Just recall Chicago, where the dead emerged from the city's graveyards to vote early and often in sufficient numbers to shift the Illinois results and the presidential election outcome to the hallowed John F. Kennedy.

(Despite having despised Nixon from beginning to end, I always have had to admire and respect his acceptance of, and refusal to challenge JFK's election. He clearly foresaw the consequences of refusing to accept even a highly questionable election outcome.)

The chicanery is escalating because it now is easier to steal elections than it has been in the past. Motor voter registration, same day registration and voting, willful lack of oversight by supposedly responsible but irresponsible and partisan election officials, and a complicit judiciary all contribute to what is increasingly becoming -- and coming to be widely recognized as -- a farce.

Is it any wonder that an increasing percentage of eligible citizens refuse to participate in a process that they realize is being manipulated by political insiders.

We areoming dangerously close to the third world system of one man, one vote, one time. No government produced in this way has any claim to legitimacy. It has no basis for expecting acceptance, loyalty, or respect. Accordingly, such a government can expect compliance with its actions, decisions, and policies only from those who agree with them on an ad hoc basis in each individual instance, and beyond that only to the extent that it has the will and the ability to use plain and simple brute force to compel obedience.

Those who buy the Congress get the money. Look at it as superb returns on the five and six figure bribes a.k.a. campaign contributions to members of the political elites.

Ordinary people who can't or are unwilling to buy members of Congress in sufficient numbers are left to survive or go under on their own. Big corporations, big labor unions, and a few fat cat individuals reap several hundred or even several thousand times what they expend to get and keep their favorite public officials ensconced in comfy public offices. The rest of us are to quiescently continue paying our taxes to keep the gravy train moving on their circular tracks.In case you haven't figured it out, that's why we don't have a tax code simple enough to be understood even by the chairman of the committee responsible for it. Constant tinkering with the Internal Revenue Code means millions for the bribe givers while the ability to keep changing the code's details enables the bribe takers to keep their donors in line.

Now the bribers are raising the ante. No longer satisfied with millions upon millions of dollars in little noticed subsidies, they want and are getting tens of billions of our tax dollars in direct cash infusions. We provide the swill and our lawmakers keep it circulating among themselves and those who buy their favors.

"Freddie Mac posted a $25.3 billion net loss for the third quarter on surging investment and credit losses, as the mortgage giant announced plans to seek an initial $13.8 billion from the Treasury Department to shore up its shareholder equity. The company expects to receive the funds by Nov. 29."

And the only other thing one needs to know is that Obama has included on his economic advisory team the governor of Michigan, who has made her state the nation's leader in job losses and tax increases.

Thursday, November 6, 2008

"Let the American youth never forget, that they possess a noble inheritance, bought by the toils, and sufferings, and blood of their ancestors; and capacity, if wisely improved, and faithfully guarded, of transmitting to their latest posterity all the substantial blessings of life, the peaceful enjoyment of liberty, property, religion, and independence."

Wednesday, November 5, 2008

As visitors to this site are aware, Barack Obama was not my choice for the presidency -- I supported and voted for Sarah Palin and the hapless guy with whom she was running. I have had and continue to have serious concerns about what the Obama presidency may portend for the country.

These concerns are wide ranging -- everything from our individual freedoms and liberties, national defense, foreign policy, and what little remains of the free market economy that -- notwithstanding the current severe downturn -- has given Americans an unprecedented level of widespread prosperity. All these may be risk and seriously threatened.

Nonetheless, the voters have made their choice. It was a clear one. That was their right and we all will live with the result.

I, for one, wish the President Elect well. I hope his administration will be a wise and moderate one. As a conservative, I will endeavor to cooperate and compromise with his policies to the extent it is possible to do so without in the least yielding on matters of principle or support for, and adherence to the Constitution. That will be my line in the sand if these things are threatened as some of the campaign rhetoric of the President Elect indicated they would be.

The conduct of the Republican party and the role of the press in what has transpired and their respective future courses are serious matters to be considered and dealt with in the coming days.

For now, I am -- and would have others -- hoping and working for the best while at the same time preparing for the worst.

Sunday, November 2, 2008

An ominous pattern of efforts to stifle and suppress, or to punish any dissent has emerged in the Obama campaign.

The most recent example is the banishment from the campaign's aircraft of reporters for three major newspapers that have had the effrontery to endorse Obama's rival for the presidency.

The campaign claims it was purely coincidental that reporters for publications favoring McCain's election were selected for removal because of space limitations. Nonetheless, the campaign has found space for reporters for a couple of black magazines with very limited readerships. The claims are patently bogus and reflect an astoundingly arrogant confidence that the public will accept any nonsense the campaign put out.

Furthermore, the punishment of the offending publications is part and parcel of, and only the latest example in a consistent series of actions demonstrating intolerance and aggressive hostility toward anything other than blind adherence and total unquestioning support for Obama. Consider the following additional examples:

* In Chicago, Obama supporters waged an organized campaign against a radio station for airing the views of a recognized journalist who had written a book and was talking about things in Obama's past that he and his campaign have managed, with the cooperation of the compliant media, to keep hidden.

* In Missouri public officials supporting Obama and his campaign for the presidency threatened to bring and prosecute legal actions against individuals and organizations publicly expressing criticism of the candidate that the officials considered to be false. We haven't seen the likes of this since repeal of the 19th Century's Alien and Sedition Laws.

* Joe the Plumber has been savaged, with his private life becoming fair game, and his lack of a plumbing license exposed and broadcast by public officials, because he dared to ask questions and say things embarrassing to Obama.

* Obama supporters hacked into Sarah Palin's personal and private computer files and e-mails for information that might be used to criticize her.

* Lawyers for the campaign demand that broadcast outlets not air NRA ads critical of Obama.

In light of the above, which are just a few of a great many similar examples that could easily be cited, media that were doing their job and not merely propaganda outlets for the Obama candidacy would be asking what this pattern portends for them and for the country if Obama is elected president.

All be the most doltish and obtuse citizens and a noncaptive press should see in the pattern a possible harbinger of the misuse of the instruments of government. Are we seeing a precursor to the use of the nation's law enforcement and tax authorities and a compliant press to threaten, punish, and prevent any criticism of an Obama administration? Would his tenure be used to institute a domestic version of the regimes of Fidel Castro in Cuba and Hugo Chavez in Venezuela?

Ignoring overwhelming citizen opposition our rulers -- posing as our representatives, claiming to know better than we do what is good for us, and, as always, purporting to act in the "public interest" -- have bestowed 850 billion of our tax dollars on the big financial institutions that use campaign contributions and other favors to keep the lawmakers in line.

Every big company now is lining up to get a share of the $850 billion trough or to get congress to create another one for their industry. It's quite a disgusting spectacle. Socialistic welfare for the rich with ordinary citizens left to struggle on their own but required to keep funding the corrupt system.

We can strike back.

The bailout amounts to somewhere between $6,140 for every taxpayer and something in excess of $10,000 for every household or family in the country.

So let's get together and claim (i) our pro rata share of the bailout as a credit against anything we owe to the banks, and (ii) the right to apply such credit against the next payment(s) payable on account of such indebtedness.

Were we to do this individually, those living large on our tax money and their high priced lawyers would pick us off one at a time. But if enough of us -- tired of being plucked to feather the nests of the fat cats and the politicians they own -- organize and act together, we can stop the flow of cash that lubricates the machine's gears and thus create enough friction to stop it and bring the corrupt system to its knees.

Kerr's Boss/Supervisor

About Kerr Mudgeon

A seasoned – meaning older than dirt — and usually bemused, observer of the passing scene, K.R. is often surprised, and occasionally angered by the antics of his fellow creatures. Kerr is a writer, private investor, independent businessman (for years did turnaround work, taking over failing businesses and restoring them to viability), defensive shooting and personal safety and security instructor/consultant, and a recovering attorney. Once head of a major law firm’s corporate practice, he currently restricts his legal work to matters that, or clients who for some reason interest him. More than a bit skeptical about the social utility of our legal system today, Kerr views most attorneys as beings whose souls died when they reached puberty although he treasures his contacts with the exceptions among them. In earlier incarnations, K.R. worked as a newspaper delivery boy, grocery store stockboy and bagger, assistant door-to-door salesman, construction worker (assistant roofer), commercial pilot, and newspaper reporter and editor. Kerr is an Eagle Scout and a combat veteran.

Contact K. R. Mudgeon:

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krmudgeon@comcast.net

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Timely Truths

“The Roman Republic fell not because of the ambition of Caesar but because it had already long ceased to be a republic at all. When the sturdy Roman plebeian, who lived by his own labor, who voted without reward according to his own convictions, and who formed in war the terrible Roman Legion had been changed into an idle creature who craved nothing in life save the gratification of a thirst for vapid excitement, who was fed by the state, and who sold his vote to the highest bidder, then the end of the republic was at hand, and nothing could save it.” . . . Theodore Roosevelt

"Corruptisima republica plurimae leges." (The more corrupt a republic, the more numerous its laws.). . . Tacitus

"Work is the curse of the drinking class.". . . Unknown

Observations, Wit, and Wisdom

When seconds count, the police are just minutes away.

"The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary." . . . H. L. Mencken

The collection of clowns who hold sway atop Capitol Hill are divided into two bodies: the lower one is the House of Reprehensibles and the upper one is the U.S. Skanksty a.k.a. the House of Gasbags.

There are very few problems that cannot be solved through the judicious application of a sufficient quantity of high explosives.